Which Price is Right?

“A company is making two versions of the same product… One has a little more gold and foil on it, but they’re essentially the same. One is $14.95; the other is $18.95.” Not surprisingly, the $14.95 item is selling better. It’s also the lower-profit product.|”Then a competitor comes in with a third product. Again, it’s essentially the same thing, but a fancier version. And it’s much higher priced: $34.95.”…”[W]hat becomes the best-seller? Why, the $18.95 version, of course.” Business professor Kent Monroe, quoted by Charles Fishman

[Via Robot Wisdom. The article also includes a good anecdote about Coke’s attempt to float the idea of a vending machine that raised prices during hot weather: “Consider what the reaction might have been to this headline: ‘Coke testing machine that automatically discounts prices in cool weather.'”–DGJ] —Which Price is Right?Fast Company)